The Standard of Review: Pretty Soon Someone Will Get Tired of Reviewing This

By Meredith Harper Jul 04, 2017

The Supreme Court of Canada has released the decision of Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32 (CanLII) (“Teal”). The decision deals with a commercial arbitration appeal in British Columbia.

It is worth noting that section 31 of Arbitration Act, RSBC 1996, c 55, is similar to section 45 of the Ontario Arbitration Act, 1991, S.O. 1991, c. 17, where both Acts limit appeals to a question of law, in most cases.

In an appeal, the typical standard of review for a question of law is correctness. In a commercial arbitration context, however, the Supreme Court confirmed its relatively recent findings in Sattva Capital Corp. v. Creston Moly Corp., [2014] 2 SCR 633, 2014 SCC 53 (CanLII): the applicable standard of review for appeals in a commercial arbitration context is almost always reasonableness. The Court commented that “the mere presence of a legal question does not, on its own, preclude the application of a reasonableness review in a commercial arbitration context.”

In a commercial arbitration appeal, deference is given to the arbitrator’s findings to promote efficiency and finality in commercial arbitration. In rare cases, there may be a question of law that would attract a correctness standard, such as “a constitutional question or a question of law of central importance to the legal system as a whole and outside the adjudicator’s expertise is at issue.”

This is similar to the Ontario Court of Appeal and the Divisional Court’s treatment of appeals of FSCO arbitration decisions, and private arbitration decisions in the areas of loss transfer and priority – deference is given to an arbitrator applying his or her home statute/regulation.

The best part of the Teal decision is that it provides a clear and concise summary of the principles of standard of review applicable in all appeals:

When its a question of law:

  • “Legal questions are questions about what the correct legal test is.”
  •  If the legal test is altered. Whether a judge or arbiter relied on the correct legal test is a question of law.

When its a question of fact:

  • “Factual questions are questions about what actually took place between the parties.”

When its a question of mixed fact and law:

  • “Mixed questions are questions about whether the fact[s] satisfy the legal tests or, in other words, they involve applying a legal standard to a set of facts.”

The Supreme Court, in Teal, reiterated it’s findings in Housen v. Nikolaisen, [2002] 2 SCR 235, 2002 SCC 33 (CanLII), confirming that, in a civil litigation context, factual and mixed questions are to be reviewed for palpable and overriding error. Legal questions — as per Sattva, these are questions which deal with extricable questions of law — are reviewed on a correctness standard.

Now that the Supreme Court of Canada has spoken on standards of review twice in three years, it is hoped that this will be the final word for a while.

Meredith Harper is a member of the Appellate Advocacy practice group. If you have a question about this decision or a possible appeal, please contact Meredith.